Phones 4u chief executive David Kassler said last night: “Today is a very sad day for our customers and our staff.

“If the mobile network operators decline to supply us, we do not have a business. A good company making profits of over £100 million, employing thousands of decent people has been forced into administration.

“The great service we have provided should have guaranteed a strong future, but unfortunately our network partners have decided otherwise. The ultimate result will be less competition, less choice and higher prices for mobile customers in the UK.”

Staff have been asked to report to work as normal this morning as they will be briefed by management.

The business was set up by entrepreneur John Caudwell in the mid-1980s. By the time he sold it for £1.5 billion in 2006 it was selling 26 phones a minute and employed 10,000 people. It generated sales of more than £2.25bn.

Phones 4u said it remained a profitable business, with turnover of over £1 billion, underlying earnings of £105 million in 2013 and significant cash in the bank.

It said: “The unexpected decisions by both Vodafone and EE have come as a complete shock to the business. The company is in a healthy state and both EE and Vodafone had, until very recently, consistently indicated that they saw Phones 4u as a long-term strategic partner.”

Phones 4u said all mobile contracts bought through Phones 4u will remain unaffected and the networks will continue to provide mobile services to these customers.

The process of appointing accountancy giant PwC as an administrator is expected to take place today.